A common symptom of eutrophication in temperate estuaries is the proliferation of ephemeral, floating macroalgae. Information on the effects of blooms on underlying assemblages mostly originates from non-vegetated intertidal and subtidal habitats. Blooms also often settle in large aggregations over seagrasses, where they decompose. To test hypotheses concerning the effect of dense mats on underlying assemblages of benthic invertebrates within a seagrass meadow, biomass of the green macroalga Enteromorpha intestinalis was experimentally manipulated in the Tuggerah Lakes estuary, New South Wales, Australia. Algae, equivalent to a naturally occurring bloom (~4.5 kg wet wt m⁻²), were added to caged plots (1 m²) at 2 sites in the seagrass meadow. After 3 mo, the E. intestinalis population began to decompose in the treatment plots and in shallow habitats adjacent to the foreshore. Dramatic declines in the biomass of seagrass and components of the infauna were detected in plots containing decomposing macroalgae. The results have implications for managing estuaries, since assemblages of seagrasses and macrobenthic organisms are considered to be important in nutrient-cycling and food-webs.